Probate and Estate Administration What is it?
When someone dies, all their cash, investments and property (their estate) needs to be distributed, either in accordance with their Will or according to the rules of Intestacy. This process is known as Probate or the Administration of an Estate.
Where the deceased left a valid Will, A Grant of Probate gives the Executors the legal authority to close bank accounts, sell shares and to sell or transfer property. If there is no valid Will, then a relative normally undertakes the probate process by applying for a Grant of Letters of Administration and they become the “Administrator” of the estate.
A formal Grant of Probate is not always required. How much the deceased owned and how they owned it has an effect on this. For example, if the deceased owned everything jointly with a spouse, then on their death everything passes automatically to the remaining spouse and no probate is needed.
Probate is rarely required for low value estates up to £5,000. Above this amount probate may be required. If the estate assets are held in cash with local Banks or Building Societies some of these will allow the executors to deal with this up to £50,000. Whereas others may impose lower limits before a grant of probate is required. There are no rules, it is up to the individual institution.
If there are shares in the estate, these can also be dealt with without the need for probate if the amount is small. Again, this varies between different companies and financial institutions, but many have a “small estates procedure”.
Where a property is involved, and this is not jointly owned, then it is almost certain that a Grant of Probate will be needed.
If probate is required, then there are various forms to complete and tax returns to deal with. The executor or administrator is legally responsible and liable for complying with these requirements.
Who can administer an Estate?
Where a person has made a Will, they have probably nominated Executors in that Will. The Executors are often the children, close relations or friends of the deceased, but it can be anyone. Sometimes the Will names Solicitors or other professional to act as the Executor. This can be an expensive option, but some times it is the only option where the deceased has no family or friends who can or who are willing to take on the responsibility.
If someone dies without appointing Executors which is usually because they have not made a Will or it can’t be found, then someone has to apply to the Probate Registry for a Grant of Letters of Administration. In this situation the law of Intestacy sets out who can apply for this grant. There is a pecking order as to who can apply and indeed who can benefit from the Estate where there is no Will. The order of priority in such a situation is:
- A surviving spouse or civil partner
- Sons or daughters
- Brothers or sisters
- Other relatives
Whoever undertakes this role, they can be held personally liable for any loss due to a breach of the duty owed to the beneficiaries of the Will, even if this breach was an honest mistake. (see how it went wrong for one family) Once the grant has been issued by the Probate Registry, the Administrators can legally deal with the deceased’s Estate.
- Identify all of the deceased’s assets, this includes property, money, shares, investments and personal possessions, such as cars, antiques and jewellery. This is so the full value of the estate can be established,
Ascertaining who all the beneficiaries are, what they are entitled to and if they have predeceased are their children going to inherit in their place?
This becomes especially complicated when the deceased died intestate. (See our article “How not to do it!)
- Complete and submit Inheritance, Income, Capital Gains tax returns to HMRC and making payment as required. Pay any outstanding debt and obtain receipt for payments. Issue public notices of death.
- Consider the use of a Deed of variation to assist with any tax liability or other distribution of assets issues.
- Prepare Estate accounts detailing all payments into and out of account.
- Transferring any assets the beneficiaries intend to retain and finally, distribute the estate assets to the beneficiaries.
This process takes, on average, between 3 months to a year. In some cases, it can take much longer.
Our fixed fee service takes all this stress and responsibility away from you.
Many people underestimate the amount of time and the level of complexity involved in administering someone’s estate.
What we do need to point out is that being an executor makes you personally legally liable should something go wrong.
Lay executors often miss interpret the meaning of a Will. At best this means further delays and at worst that the executor may be required to pay beneficiaries out of their own pocket where things gone wrong.
We are able to offer a highly competitive and efficient probate service.
Atheneys cover Ringwood, Bournemouth, Poole, Dorset & South Hampshire.